Reduced rate VAT

02/03/2018 08:05:24
I would really appreciate some help with where to get some information from on how I can reclaim VAT in the following circumstances:

We are a very small development company either renovating existing dwellings or building one-off new builds.

However, we are currently converting an agricultural building into a new dwelling. and in these circumstances the final sale is zero rated.

In addition, I believe that we only need to pay the reduced rate of 5% VAT on applicable purchases (where we would normally pay 0% on new builds). This could include, for example, materials which constitute the main fabric of the building (bricks, etc..) but not for non-eligible purchases (carpets & white goods, etc..). I can get the lists of what is and isn't eligible from your web site - that isn't the issue.

As I understand it this means that during the build, when I submit my period VAT return that we can reclaim our VAT during the build (on applicable purchases) where suppliers have charged us the full rate of 20%.

Obviously we will ask suppliers to charge us at 5% where possible. However some suppliers won't do this, for example we might get supplies from somewhere like B&Q where we will be charged 20% VAT or from smaller suppliers who are not willing to risk being fined for charging the wrong VAT rate.

My question:
When a supplier charges me 20% VAT but should only have charged 5%, can I reclaim 15% of any relevant purchases on my VAT return for that period?

Example: If an eligible net invoice is £100 and a supplier charges me £120 (ie: £100 + VAT at 20%) then can I reclaim £15 on my VAT return as I should only have been charged £5?

Many thanks for any input, kind regards, Janet

Re:Reduced rate VAT

05/03/2018 10:10:01
Good Morning Janet
Thank you for your enquiry. I have referred this to my technical team. I will come back to you when I hear from them.